Seagate reports $496M Q2 loss

Describing macroeconomic trends as "worse than what anyone expected even just a few months ago," Seagate Technology's new chief executive announced Wednesday a $496 million loss for the second quarter.

[Losers]

Billions in revenue and they can't have in place a watertight business model, including preparations to a steep drop off in sales at the same time as faulty products. Their much tauted drives have failed me more than once, I have had better luck with Toshiba and Western Digital. Solid state drives will also be replacing their technology, since they are simpler and cheaper to produce and will ultimately replace their buggywhips. Bye!

[Rick]

Losers wrote:

Billions in revenue and they can't have in place a watertight business model, including preparations to a steep drop off in sales at the same time as faulty products. Their much tauted drives have failed me more than once, I have had better luck with Toshiba and Western Digital. Solid state drives will also be replacing their technology, since they are simpler and cheaper to produce and will ultimately replace their buggywhips. Bye!

While I agree that there drives are junk these days, Western Digital is also a Seagate company. I'm sure there exects will still get a great ck.

[Losers]

My 80gb WD drive is like 6 years old, and doin just fine, unlike the 500gb Seagate which outlasted its warranty by about a week. Is my WD pre-Seagate? Anyway, staggering failure.

[tech worker]

You people are ignorant and know nothing about this market. WD is NOT a Seagate company. Maxtor is a Seagate company. WD is Seagate's COMPETITOR and quite frankly is kicking their butt in every sense of the word.

Secondly, SSD is NOT cheaper to produce and there are some technical limitations. Apple offers an SSD drive on their laptops and it hikes the price a hefty $1,000 (last time I checked). Why pay that kind of price for storage? The I/O performance gains are not worth the price and the market shows that.

Seagate definitely has quality issues with their 7200 rpm Barracuda drives. It has some microcode bugs and Seagate has issued a patch, but that is no relief to those with sensitive and irreplaceable data that is now lost because of failure. The data becomes unrecoverable after the drive fails.

They also have issues with the 500gb FreeAgent drives, which vendors are having fire sales of right now, wherever they sell them (under $100). These drives have overheating problems and freeze after an hour or two of use.

The solution to this problem (a hack) is to take the case apart and disconnect the light. However, this voids the warranty.

All bad news for Seagate.

Seagate is coming out with an SSD product for their enterprise market next quarter. But companies are not investing in new hardware these days unless there are compelling reasons to do so. This will not save Seagate.

Basically, this is a $12 billion a year company that as been reduced to a $5 or $6 billion a year company in less than a year. The stock has plummeted from $24 p/share to $4 p/share for good reason.

More layoffs might be coming in April, along with more bad numbers. But that's just me speculating.

We'll see if Steve can pull it out of the fire. He might just be shining up the apple in order to sell it to the highest bidder. Maybe some Chinese company will buy it, but that would be subject to scrutiny of the FTC and the various 3-letter security agencies.

Just over a year ago, Seagate had 1,800 drives that left their China facilities with a virus embedded on them, which would log onto a Chinese website and then download the entire hard drive of data.

I would think that would make agencies like the NSA, a little nervous about installing a Chinese manufactured drive on their internal or field computers.

Only time will tell where this company ends up.

[Hillbilly Crash Helmet]

Regardless of the price (which will come down significantly and quickly) flash memory is the way of the future. As to Seagate (which doesn't own Western Digital) denial is not a river in Egypt. 2nd rate products with dwindling marketshare is a bad business model. Al Shuggart must be disappointed up there in entrepreneur heaven. Timing is everything and in a messed up economy Seagate picked the very worst time to screw up. Why do CEOs get paid so much to be idiots? Go Steve!

[tech worker]

Regardless of the hype, SSD is not necessarily the godsend everyone thinks it is. Current flash technology has limited times that flash memory can be written to. This may not seem like a realistic limitation to you, but you must remember, system files, such as logs, are written to constantly. This means the drive that you just paid up to 10 times more per GB for has a much shorter lifespan than the "old" technology of spinning platters and read heads.

Most consumers cannot justify the higher prices.

As far as Seagate and the "denial" statement, believe me, they are very aware of the flash market and its potential. But you have to understand the operations of manufacturing SSDs en masse. That requires retooling production lines, retraining shop floor employees, training support technicians and establishing new OEM agreements with vendors.

Seagate already has SSD research and design efforts ongoing in Minnesota. But the mass market isn't there, and it needs to be in order to have a financially successful launch.

But there are definite problems with their CURRENT business and it has nothing to do with SSD competition.

We shall see what Steve can pull out of his bag of tricks, but it will be a financial strategy, not a marketing or sales strategy.

[Jerry]

Good commentary. American employees should work hard to try to keep this company going. Just because there registered in the Caymans, There are many locations here in America employing thousands of people. Don't do anything to hurt employees doing there jobs ethically, and you should help this company to thrive before it closes all doors here in America by being bought out!!!